Key Takeaways
- Medtronic finished splitting off its MiniMed diabetes business on Oct. 15, and Abbott plans to spin off its Nutrition business by the end of 2027.
- Medtronic has the higher yield, 2.9% against 2.5%, but Abbott has raised its dividend 9.4% a year over its last five fiscal years, against 4.1% at Medtronic.
- Both dividends are well covered, taking 64% of free cash flow at Abbott and 60% at Medtronic over the latest twelve months, and 54% and 58% on analysts’ estimates.
- Medtronic reports on Nov. 24, its first results since the split-off.
Medtronic (MDT) finished splitting off its diabetes business on Oct. 15. It swapped its remaining stake in MiniMed for about 55 million of its own shares. Six days later, Abbott Laboratories (ABT) said it plans to spin off its Nutrition business, the home of Similac and Ensure, by the end of 2027.
So, both dividends will soon come from leaner companies. Medtronic pays the bigger check today, a 2.9% yield against Abbott’s 2.5%. But Abbott’s dividend has grown more than twice as fast. So, which one pays you more over the next 10 years?
| Metric | Abbott (ABT) | Medtronic (MDT) |
|---|---|---|
| Dividend yield | 2.5% | 2.9% |
| Annual dividend | $2.52 | $2.88 |
| Dividend growth, 5 years | 9.4% a year (fiscal 2020-2025) | 4.1% a year (fiscal 2021-2026) |
| Cash dividend payout ratio, TTM | 64% (to Sept. 30, 2026) | 60% (to July 31, 2026) |
| Cash dividend payout ratio, forward | 54% (fiscal 2026 consensus) | 58% (fiscal 2027 consensus) |
| Net debt/EBITDA | 2.3x | 1.8x |
| Interest coverage | 7.6x | 10.4x |
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Abbott’s cash keeps climbing
Abbott’s growth is coming from its devices. Third-quarter sales rose 14.5% as reported and 7.0% on a comparable basis. Electrophysiology and rhythm management grew by double digits on the new Volt PFA catheter, and Cologuard added sales after the Exact Sciences deal. Diabetes care is the soft spot: management now expects its growth to run at low-to-mid single digits for several quarters, under international pricing pressure.
The $0.63 quarterly dividend took a well-covered 64% of free cash flow over the twelve months to Sept. 30, 2026. On analysts’ fiscal 2026 estimates, it takes 54%. Free cash flow rose from $2.08 billion in fiscal 2016 to $7.40 billion in fiscal 2025, and it covered dividends paid in every year of the chart:
Abbott says it has raised its dividend for 54 consecutive years. The Nutrition spin-off isn’t meant to shrink the check, either. Abbott said on its third-quarter call that it expects both companies “will pay a dividend that, when combined will equal Abbott’s dividend at the time of the separation.”
Medtronic’s raises have gotten smaller
Medtronic is growing fast in the same heart-rhythm market. Cardiac Ablation Solutions sales rose 88% in the first quarter of fiscal 2027, the three months to July 31, 2026. Total revenue rose 13.7% to $9.8 billion, and management raised its fiscal 2027 organic growth guidance to 7.25% to 7.75%. The split-off costs Medtronic a growing business, with diabetes sales up 16.9% in the quarter, but the shares it took back leave fewer shares to pay a dividend on.
The dividend took 60% of free cash flow over the twelve months to July 31. On analysts’ fiscal 2027 estimates, it takes 58%. That’s comfortable for now. But free cash flow was $5.63 billion in fiscal 2017 (years to April) and $5.43 billion in fiscal 2026. Over the same years, dividends paid rose from $2.38 billion to $3.64 billion:
The dividend rose just 1.4% in fiscal 2026, against 4.1% a year from fiscal 2021 to fiscal 2026. Medtronic’s Nov. 24 report, for the quarter to Oct. 30, is its first since the split-off.
So which dividend wins?
Abbott pays you more over the next 10 years, and I think it can keep it up.
Put $10,000 in each today, and Medtronic’s $290 a year beats Abbott’s $250. But at each dividend’s 5-year rate, Abbott’s income passes Medtronic’s around 2029. Over the decade, Abbott pays about $3,876 in all against about $3,502, about $373 more. By year 10, Abbott’s check is about $562, a 5.6% yield on your original $10,000. Medtronic’s is about $417, or 4.2%. Use each dividend’s pace now instead: Abbott raised its dividend 7.1% in fiscal 2025, and Medtronic raised its own 1.4% in fiscal 2026. At those rates, Abbott still comes out about $384 ahead over the 10 years.
Abbott looks able to keep its pace. Analysts expect its free cash flow to reach $8.2 billion in 2026 and $9.1 billion in 2027:
Abbott also says the Nutrition plan won’t change the guidance it gives in January.
Medtronic’s case for its own is a good one. It pays the bigger check today and carries less debt. It also just raised its guidance, and analysts expect its free cash flow to rise 16% in fiscal 2027. It’s just that Abbott has rising cash flow behind every raise, and Medtronic hasn’t had that for a decade.
Of course, Abbott’s Nutrition spin is due by the end of 2027, and after that your check comes from two companies. If either raises its dividend more slowly than Abbott has, Medtronic could close the gap.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
